Senior Labour ministers forced to apologise for dire handling of Equitable Life collapse

Two senior ministers were forced to apologise today after being accused of betraying hundreds of thousands of Equitable Life policyholders who lost their savings in the insurer's collapse.

Labour's deputy leader Harriet Harman and Treasury minister Ian Pearson told MPs they were sorry that the Government had failed to respond to recommendations that it pays compensation to those who lost out.

Prime Minister Gordon Brown told MPs earlier this month that the Government would end uncertainty for the Equitable Life losers by Christmas.

Deputy Labour leader Harriet Harman and Treasury minister Ian Pearson have said the long-awaited report on Equitable will now be published next year

But almost a decade since the firm folded, the Government has shelved its response yet again until the New Year.

A damning report in the summer from the Parliamentary Ombudsman found the Government guilty of a 'decade of regulatory failure' that contributed to the collapse and said losers should be compensated.

Equitable Life was brought to the brink of collapse after the House of Lords ruled in 2000 that it must honour its obligations on policies with guaranteed annuities. It faced liabilities of £1.5billion.

More than one million policyholders lost an estimated £4billion as Europe's oldest mutual came close to bankruptcy.

In her report, Parliamentary Ombudsman Ann Abraham condemned the Department of Trade and Industry, the Government Actuary's Department and the Financial Services Authority for failing to take proper steps to protect policyholders.

At Commons question time earlier today, Tory MP Andrew Mackay asked why the Prime Minister had 'clearly and twice repeated' that there would be a statement by Christmas.

Mr Pearson said: 'I had hoped that we would have been able to make a statement on Equitable Life before the recess.

'It is a matter of regret to me that we haven't been able to do so and I would like to apologise to the House and to the Prime Minister that it has taken a little bit longer than I would have liked to get the policy options to a stage where we can make a firm decision and issue a statement.'

Miss Harman also apologised for telling MPs the Equitable Life statement would be released in the autumn.

'I'm sorry it wasn't available when I said it was going to be available,' she told MPs.

'But what happened is that it wasn't complete and therefore my announcement to the House was contingent on it being finished.

'It's not as if it's complete and we're just sitting on it - that's the point I want to make.'

'He has broken the promise he gave just days ago and betrayed thousands of Equitable Life savers waiting for justice.

'The Parliamentary Ombudsman's report is a damning indictment of Gordon Brown's failings as Chancellor and we don't have to wait until after Christmas to know that the recommendations should be implemented and savers should be treated fairly.'

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Senior Labour ministers forced to apologise for dire handling of Equitable Life collapse